Sygnia navigates tough markets


Sygnia navigates tough markets

Published Date: 2018-12-03 | Source: Stephen Gunnion | Author: Stephen Gunnion

Sygnia navigates tough markets

The financial services and asset management group says an improving second half was derailed by a volatile September.

The past year has been a volatile one for world markets, and emerging markets in particular. After a tough first half, asset manager Sygnia says markets were on the way to a degree of recovery during the second half. However, this was derailed by an extremely volatile and challenging month in September. The difficult market conditions led to muted returns on the fund manager's invested capital.

Tough markets aside, Sygnia managed to grow assets under management and administration by 21% to R223 billion in the year to end-September. Revenue rose 26.6% to R422 million, boosted the higher assets under management and the full-year inclusion of Sygnia Itrix, the international exchange-traded funds acquired from Deutsche Bank in 2017.

Total expenses rose 21% to R279 million, partly due to increased costs associated with the administration and management of the Itrix ETFs by third-party outsourced providers. Finance costs were also much higher due to the costs incurred on the funding structure implemented for the acquisition of Itrix. Net profit after tax increased by 9.1% to R101 million. However, muted returns in invested capital due to the difficult market conditions left headline earnings per share flat 69.15c. It's maintained its total dividend at 60c per share.

In its institutional business, Sygnia said it attracted a significant number of appointments in the investment administration area, a low-cost service which, while not hugely profitable, gives it exposure to some of the largest retirement funds in the country.

Sygnia Employee Benefits, an umbrella fund provider, attracted larger employers as it gained critical mass, increasing its assets to R4.2 billion from R2.4 billion.

Assets under management in passive strategies reached R39.3 billion at the end of September. It said its 4th Industrial Revolution Global Equity Fund returned 22% during the year and the Sygnia ForLife Annuity continued to attract inflows. It also launched a FAANG Plus Equity Fund, giving exposure to the large US tech firms.

Sygnia's shares fell 4.5% to R7.50 on Friday.

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